Recently, according to information on the Alibaba auction platform, the first round of auction for the machinery, equipment, accessories, and materials owned by the Shaoxing branch of Fujian Skyworth Automobile Manufacturing Co., Ltd. has concluded. The final winning bid was RMB 64.95589 million. Auction records show that 18 bidders participated in the auction, and after 683 rounds of bidding, a buyer identified as “Boss Liu from Shaoxing” won the asset package for roughly RMB 64.95 million. The appraisal report indicated that some of the assets were missing components due to theft, and since the equipment had been idle for a long period, there is uncertainty as to whether it can function properly.
It is worth noting that the final purchase price is less than one-tenth of the book value reported in an audit report previously issued by PwC Zhongtian as of December 31, 2020. That audit report listed the book value of these assets at nearly RMB 1 billion. In fact, as early as April of this year, a batch of movable equipment under the Shaoxing branch had already been put up for auction on a judicial auction platform. At that time, some of the facilities were auctioned off with a starting price of RMB 3.9152 million.
Skyworth Auto was considered one of the earlier “new energy vehicle” startups in China. Its predecessor was Zhejiang-based automaker Dianka Auto, which was one of LeEco’s investments in the automotive supply chain. In 2018, Dianka shifted its focus to the high-end market and officially changed its name to Skyworth Auto in 2019. However, Skyworth Auto’s transformation has been anything but easy. Its first model, the Skyworth ME7, debuted as early as 2018, positioned as a mid-to-large pure electric SUV. However, possibly due to capital shortages and other challenges, the model was not officially launched until September 2020 and began deliveries in October 2020, with a price range of RMB 218,800–289,800. Unfortunately, the vehicle failed to gain traction in the market. Data shows that in 2020, the total sales of the Skyworth ME7 were only 97 units.
In an effort to reverse its poor sales performance, Skyworth Auto launched its second mass-production model, the ME5, in July 2021. The new car was positioned as a compact SUV and offered in two configurations, with prices ranging from RMB 149,900 to 159,900. However, sales still did not improve after the launch. Data shows that in 2021 Skyworth Auto sold a total of 1,778 units, and in 2022 that number rose modestly to 5,321 units.
Persistently weak sales strained Skyworth Auto’s finances further. As early as 2019, reports emerged of delayed salary payments to employees, unpaid fees to partners, and the closure of offline dealership channels. In 2022, Skyworth Auto was reported to have suspended operations and production. In April 2023, an alleged internal company notice circulated online, stating that from April 1, 2023, certain positions would be subject to suspension of production and work. During this suspension period, employee social insurance contributions would still be declared based on the original contribution base. After the first pay cycle, affected employees would be paid a living allowance according to the local minimum wage standard, until the company resumed production. During this period, employees were allowed to seek new employment opportunities and resign voluntarily. In the year or two since, no public news of production resumption has surfaced.
Skyworth Auto’s current situation—suspension of production and the auctioning off of its factory machinery—is closely tied to its poor sales performance and limited delivery capacity. The company had previously relied heavily on subsidies, but as subsidies were phased out and sales remained sluggish, Skyworth Auto struggled to establish a sustainable profit model, leading to a break in its cash flow. Compounded by the rapid changes in the automotive industry and intensifying competition in the market, China’s new energy vehicle sector has long entered an elimination round, with many startups falling by the wayside in recent years. For Skyworth Auto today, with its machinery and equipment already sold off, the possibility of staging a comeback is becoming increasingly remote.
